Every lawyer enters the business of law to make it profitable. Even a small law firm of Smithfield lawyers can make tons of revenue with $198,000 as the yearly average. However, for every success story, you will find plenty of law firms that filed for bankruptcy; in some cases, the things that can bring a law firm to its knees are mild. So let’s take a look at how to run a law firm for maximum profits.
Tip #1: Don’t Manually Do Administrative Tasks
You can automate many administrative tasks requiring so much of your time. The average small law firm spends 40 percent of its time on administrative tasks. You only get so many hours in the day, and wasting it on administrative tasks won’t increase revenue.
In some ways, you can’t escape an enormous load of administrative tasks, and you will always deal with it on some level. However, legal technology can automate a larger part of it so that you can focus on profit. Many law firms that used legal technology increased their revenues by an estimated 40 percent.
Tip #2: Deliver an Unparalleled Client Experience
Over the long term, nothing you do will have so much of a positive impact as delivering a solid client experience. Your reputation will improve, you will receive repeat business, and you will likely even see referral clients.
Keep in mind that the outcome of a case doesn’t always affect a client’s satisfaction. However, many felt satisfied even with a less positive outcome if the lawyer was attentive and delivered client-focused legal services.
Identify the patterns in client feedback to improve your legal services. Then, keep using their feedback to become a better law practice. For example, one of the biggest complaints against law firms is their lack of speed when responding to clients.
Tip #3: Don’t Undersell Yourself
Many lawyers gravitate to a flat rate fee model, but you still need to track your hours and the amount of time invested into each case. By measuring the duration, you can ensure that you receive fair compensation for the work, thus avoiding significant undercharging.
This doesn’t necessarily mean that you should charge more; in fact, many clients may avoid your firm if they feel you overcharge for your services. So instead, work fewer hours and keep the prices the same. Then, send the time-draining tasks over to automation. At the same time, you can take on more clients and earn greater revenue.
Tip #4: Set Measurable Goals
You need to set realistic goals that you can target and achieve. For example, while increasing the profits at your law firm seems noble, you need to set attainable, measurable, and deadline-oriented goals to focus on.
Let your goals serve as a map for where you would like to go. Once you write down your goals, track them and look for resourceful ways to achieve them. This is one of the best ways how to run a small law firm successfully. Always have a positive direction to look toward.
Track the following metrics to understand better your profits and how to achieve higher gains:
- Revenue per month
- Revenue per employee
- Net overhead
- Revenue collected each month
- Amount of debt
- Operating account balance
Keeping an eye on these metrics will help you to see paths toward higher profits.
Tip #5: Invest in Different Tech Solutions
With the growth of cloud-based technology, legal firms can streamline their operations and provide their customers with improved service. This helps them focus on their core business activities and improves their work-life balance. In addition to attracting new clients, cloud-based solutions can help them retain their existing ones. The benefits of cloud-based services include cost savings and greater security. It also allows for easy file sharing and eliminates the need for endless reams of paper.
The investment may involve a small loss of billable hours, but the long-term impact can be great. For example, robust case management software and powerful scanners can improve attorneys’ efficiency. Likewise, investing in internet speed is an important expense for any business. A slow connection can cause frustration and waste time. Technology can help law firms grow, providing a competitive edge.
Conclusion
Making the most profit matters, but never do it at the expense of your hard-fought reputation. You must think of your law firm over the long term. Never take actions that would damage your chances at success for a short-term profit. Unfortunately, many law firms found this out the hard way.
Going into practicing law is also about more than the profits, however. You want to make a difference in the community and serve clients with great services they couldn’t receive otherwise. So trying to make a difference matters more than money.
